Gym Profit Margins, Cost, Revenue Explained 2024

The fitness industry is flourishing & if fitness is your passion, then opening a gym might seem like an opportunity worth considering.

Gym profitability, investment, and factors that affect a gym’s profitability might be some questions right at the top of your mind.

Do not worry; we got you!

In this comprehensive guide, we have answered all the necessary questions that you may have regarding opening a gym, its profitability, cost, etc.

Gym Profitability

How Do Gyms Make Money?

Gyms make money from multiple sources, including:

Training Classes

As a means to increase profits, gyms offer group or personal training classes. These classes can be included in the membership fees, or they can be offered as an extra service.

Recently, there has been a major shift towards gym switching to an all-class business model, where they only offer group classes example, spin classes or HIT, etc.

Membership fees

Membership fees are the major source of income for gyms. In fact, according to PolicyAdvice, gym membership fees constitute 60% of a gym’s revenue.

Although the most common type of membership gives the members access to various amenities in the gym, many top-tier membership plans include extra services like access to nutrition plans, free training classes, etc.

Merchandise

Gyms can increase their revenue by selling activewear and fitness products offline or online. Targeting existing customers can be a great starting point for this.

Nutrition Planning

As people are getting centered more toward fitness, providing nutrition planning can be a great way for gyms and fitness centers to increase their revenue.

Gyms can offer nutrition planning along with consultation separately or in a package, making room for more income streams.

Online classes

A lot of people do not prefer going to the gym. Offering online gym classes can help you reach such customers allowing you to make more money.

The best part about this is that you can train multiple people at once in an online setting, or you can even do a one-on-one session and charge higher.


Pros & Cons of Opening a Gym

Pros & Cons of Opening a Gym

Pros of Opening a Gym

  • High-profit margin
  • Multiple revenue streams
  • Scaling opportunity
  • Daily exercise
  • Rewarding work
  • Gives an outlet to build meaningful connections

Cons of Opening a Gym

  • External competition
  • High overhead expenses
  • Requires a commitment of time
  • High employee turnover
  • Finding the right supplier may take time

How Much Investment Is Required to Start a Gym?

If you dream of owning a gym, then you must be wondering how much does it cost to start a gym.

It can cost anywhere between $10,000-$70,000 to start a modest gym and can go up to $1,00,000+ for a high-end gym.

The cost varies depending on the size of your gym, location, rent, types of equipment, etc.

Although the initial investment may seem like a lot, if your timing and location are on point, it will take you only a year or so to reach break even.


What is the Average Cost of Gym Equipment?

Gym equipment costs $2,000 – $3,000 per piece on average if you go for buying new equipment. Buying used gym equipment can cost two-three times less.

Additionally, building a fully furnished gym with all the required equipment can cost you $20,000 – $100,000.  

Here’s a breakdown of the average cost of different types of gym equipment:

Type of gym equipmentAverage price for new gym equipmentAverage price for used gym equipment
Weight plates $1.5 per pound $0.5 per pound
Pre-Weighted Barbells$100 per barbell $50 per barbell 
Dumbbells $1,000 to $2,000 for a 10-piece set$500 for a complete set
Adjustable Dumbbells$200 to $500$100 to $200
Power Cage$800 to $1000$350 to $500
Weight Racks$200 to $500$100 to $200
Benches$100 to $200 $40 to $80
Exercise Bikes$200 to $2,000$300 to $400
Treadmills$300 to $1000$150 to $600
Stepmills$2,000 and $5,000$1000 to $3500
Ellipticals$200 to $1,000 $600 to $800
Pull-Up Station$200 to $500$100 to $250
Cable Crossover Machine$500 to over $3,000$200 to $2000
Workout Mats$20 to $100
Kettlebells$20 to $200
Resistance Bands$30 to $100
Medicine Balls$20 to $50

One-Time Cost of Opening a Gym

The one-time cost of opening a gym could vary depending on whether you are purchasing the property or not, the state you live in, your location, etc.

However, here’s what the average cost of different expenses would look like.

Type of costAverage price
Physical locationUp to $800,000 (if you purchase the property)
Gym equipment $10,000 to $50,000
Certifications$500 to $800 per certification
Legal and processing fees$9,000 
Licenses and permits Varies
Insurance$12,000 
Computer network and POS system$550 to $2,300
Remodeling & Building improvementsVaries
Signage$20
Advertising$5,000 
Operating cash$1,000
Responsive website$300 to $700 for the initial build
Miscellaneous gym supplies$500

Monthly Cost of Running a Gym

Again, the monthly cost of running a gym would vary greatly depending on the type of gym model you have among other factors.

However, here are some average numbers for your reference:

Type of montly costAverage price
Mortgage or lease paymentsVaries
Insurance $12,000 
Equipment lease payments$3,934 to $8,067
Equipment repairs and maintenance$25,040 
Utilities$63,465 to $68,413 annually
HVAC maintenance $500 annually 
Cleaning supplies$150 monthly 
Employee wages Varies
Internet service$75 per month
MarketingVaries
Self-employment taxes/Payroll taxes7.6% of individual income
Legal and professional fees$200 per hour
Miscellaneous expenses $1000 a month

Overall, it can cost anywhere between $37,000 – $49,500 a month on average to run a gym with a minimum of twelve employees. 


Different Types of Gyms & Their Profit Margins

Type of GymAverage Profit Margin
Traditional gyms10-15%
Boutique gyms 20-40%
Yoga studios20-30%
Franchise gyms10%
Pilates studios20-30%
CrossFit boxes27%
Swimming pool and aquatic centers10-15%

Are franchise gyms profitable? Are traditional gyms profitable? Are yoga studios profitable? As you can see from the table above, they all can be!

Among the different types of gyms, Boutique gyms have the highest profit margin, followed by yoga studios, pilates studio and CrossFit boxes.


How Much Does a Gym Owner Make?

How Much Does a Gym Owner Make

According to ZipRecruiter, a gym owner in the U.S. makes $148,024 per year in revenue on average, with the top 10% making as much as $399,000 a year and the lowest 10% making $14,000 a year.

After deducting all kinds of expenses, the net income of the gym owner comes down to $65,000 – $75,000 annually on average, which is quite good.

The key figures make it clear that opening a gym is quite profitable.


Forecasting Gym Profits

Forecasting Gym Profits

In order to forecast your gym’s profit, you must find out the revenue and expenses first.

Profits = Revenue – Expenses

Forecasting gym revenues:

In order to calculate gym revenue, you simply need to multiply the total number of members in your gym with the membership fee.

So, for example, if there are 20 members in your gym and your gym membership costs $100 per month, then your membership revenue would be $20,000.

You can use the same method to calculate revenue from different types of streams that you have.

For example, if your gym also offers classes, then if 30% of your members also pay for 15 classes costing $10 each, then your classes revenue would be:

Classes revenues = Classes x Average class price = 100 x 10 x $20 = $20,000

Hence the total revenue of your gym comes down to:

Membership revenue + Classes revenue = $20,000 + $20,000 = $40,000

Forecasting gym expenses:

Similarly, in order to forecast your gym expenses, you have to take into account two types of costs:

  • Variable cost: This is the kind of cost that grows in line with your revenue.
  • Fixed cost: This includes the cost that is fixed in nature, for example, salary, rent, etc.

How To Find Out the Break-Even Point For a Gym?

The break-even point refers to the point at which your total revenue is equal to your total expenses. Or in simple words, it is the revenue amount that you must generate in order to start making a profit.

The break-even point can be calculated using:

Break-even point = Fixed costs / Gross margin

Let us assume your gym makes $40,000 a month and has the following cost structure.

Operating costVariable vs. fixedAmount
StaffFixed cost$30,000
Utility, janitorial servicesFixed cost$5,000
RentFixed cost$6,000
MarketingFixed cost$2,500
Bookkeeping, otherFixed cost$1,000
Total$44,500

So in this case the break-even point would be:

Fixed costs / 97% = $46,000

This means that you need to make at least $46,000 in order to start making profit.


How To Build a Profitable Gym Model?


Ways To Increase Gym Profitability

Here are a number of ways in which you can increase gym profitability:

  • Host bootcamps
  • Sell merchandise
  • Start a gym-wear clothing line
  • Sell higher ticket packages
  • Reduce expenses
  • Offer health coaching and nutrition services
  • Offer private training sessions
  • Start a youtube channel
  • Add upsells
  • Offer massage therapy
  • Increase prices
  • Sell home fitness equipment

Wrap Up

Opening a gym is not easy, given the amount of investment and tough competition in the niche.

Gym profitability can be attributed to a number of factors, customer retention, and location being the biggest of them.

With the right strategy and planning, you can start a successful gym and earn $65,000 – $75,000 annually on average.


FAQs

What are the factors that affect the profitability of a gym?

Different factors that affect the profitability of a gym are:

  • Membership fees
  • Size the gym
  • Number of employees
  • Location
  • Additional sources of revenue
  • Cost control
  • Target audience
  • Marketing strategies
  • etc.

What is the role of member retention in a gym's profitability?

Since membership revenue accounts for 60% of the total gym’s revenue, member retention is key in maintaining and increasing the profitability of a gym.

Is opening a gym profitable?

Yes, opening a gym could be extremely profitable in spite of tough local competition.

The key to opening a successful gym business are customer relations and retention, location, and pricing, among others.

How many members do I need for my gym to be successful?

Having at least a hundred members in your gym in the first year is a good sign, and reaching at least 300 members in the consequent years would turn your gym into a huge success.

What is the success rate of gym business?

According to Glofox, eight out of ten gyms close within the first year of business.

However, if you manage through the ups and downs in the first year of your gym business, then there is a good possibility of your gym’s failure rate decreasing.

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